Tax exile scandal: Government must close loophole on non-dom party donors, says Electoral Reform Society

Posted on the 7th March 2019

  • Statement from the Electoral Reform Society for immediate release, 7th March 2019.
  • For information/bids contact 07717211630 / [email protected].

Campaigners have demanded an end to party funding loopholes, following revelations in The Times that millions of pounds have been given to UK parties by tax exiles since July 2009 [1].

A law was passed to close the loophole allowing non-doms to donate to UK parties in 2009 – but the provision was never implemented by ministers [2].

The Electoral Reform Society are calling for comprehensive update to Britain’s ‘wild west’ party funding and campaigning rules, following their latest report [3].

The ERS is working alongside FairVote and Stephen Kinnock MP to launch a new APPG on Electoral Campaigning Transparency.

On Sky News this morning, Darren Hughes said: “The government should get on with making the basic changes we need to bring campaign rules into the 21st century.”

It comes on the first day of the High Court hearing against the government’s mandatory voter ID plans. The ERS say Ministers have ‘warped priorities’ by punishing voters rather than tackling political campaigning/funding scandals by parties [More info. Contact ERS for comment.]

Commenting on the non-dom revelations, Darren Hughes, Chief Executive of the Electoral Reform Society, said:

“No one denies that campaigning costs money, but politicians need to show some respect to their own profession by having an open and transparent funding regime: one which allows them to focus on their policy differences – not who has the largest number of rich friends based in tax havens.

“There is a basic British principle that those funding our parties should be domiciled here – indeed it is in law but not enacted. Businesses donating to parties must generate revenue here, so this is a clear legal discrepancy. As things stand, millions of people are affected by decisions influenced by non-doms and tax exiles, leaving our democracy fundamentally exposed to outside interference and unfettered lobbying.

“This wild west in party funding needs to end. Our Parliament and parties should not be available to the highest bidders around the world. It is telling that campaigners and regulators have been calling for this electoral injustice to be rectified for years now, but parties receiving these foreign donations have refused to act.

“Political parties have got to stop acting in such bad faith towards voters on this.  There are workable proposals to fix this turgid situation and ministers need to have the courage to act. The Electoral Commission has made proposals on how to make this law workable six years ago – yet still these loopholes exist.

“Now is the time stand up for voters and make this simple change. Any party which takes a lead on sorting it out can expect to reap electoral rewards. It’s time to clean up party funding once and for all, to finally start dragging Britain’s out-dated campaign rules into the 21st century.”

ENDS

Notes to Editors

[1] https://www.thetimes.co.uk/edition/news/tories-accepted-more-than-1m-from-tax-haven-britons-before-2017-poll-wg6ltkcwj

[2] http://www.legislation.gov.uk/ukpga/2009/12/section/10

[3] Read the ERS’ recent report on political campaign rules: https://www.electoral-reform.org.uk/latest-news-and-research/publications/reining-in-the-political-wild-west-campaign-rules-for-the-21st-century/

Press release here: https://www.electoral-reform.org.uk/latest-news-and-research/media-centre/press-releases/next-election-is-at-risk-of-foul-play-and-foreign-interference-without-campaign-reform-warn-regulators-campaigners-and-academics/

The ERS are calling for the government to ensure party donors are tax-resident in the UK, and that businesses funding politics are conducting the majority of their business here.

The organisation’s February 2019 report recommended six wider campaign reforms, calling on the government to:

  1. Extend the imprint requirement – where materials must show who produced them and on whose behalf – to online political advertising
  2. Improve how campaigners report funding and spending, including separate reporting for social media spend, and digital reporting of spend/donations
  3. Support the creation of a single online database of political adverts, which would be publicly available and easily searchable, would similarly increase transparency and allow voters to identify who has produced a piece of content.
  4. Give regulators greater enforcement powers, strengthening the fines or sanctions so they can act as a meaningful deterrent against wrongdoing. The ICO’s powers were increased considerably in the past year, showing what can be achieved if there is political will.
  5. Ensure parties properly engage in efforts to establish a statutory code of practice for political parties and campaigners without delay.
  6. Launch a comprehensive review and overhaul of our electoral law, which needs to be updated and future-proofed for the digital age.

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